Blockbuster aims beyond stores with TiVo deal

NEW YORK Wed Mar 25, 2009 4:47am EDT

A Blockbuster video store is seen in this undated file photo handout. REUTERS/Handout

A Blockbuster video store is seen in this undated file photo handout.

Credit: Reuters/Handout

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NEW YORK (Reuters) - Blockbuster Inc plans to let TiVo Inc subscribers download movies to their home televisions from its online movie library, in the latest deal aimed at broadening the brand to computers and other gadgets.

Under the deal announced on Wednesday, most TiVo users with high-speed Internet service will be able to view movies offered by Blockbuster's On Demand system. Blockbuster joins rival Netflix and Amazon.com, which also provide online video straight to TiVo users' TVs.

The agreement also calls for Blockbuster's brick-and-mortar stores and online shop to sell TiVo's digital video recorders, potentially exposing both companies' customers to the other's services. Financial terms of the deal were not disclosed.

For Blockbuster, the deal responds to the growing appeal of movie and video watching on computers, handheld devices, or in home living rooms via set-top boxes or video game consoles.

"You will see us in a large number of other devices going forward," said Kevin Lewis, senior vice president of digital entertainment at Blockbuster, who added that the company also plans to makes its system available to Apple Inc's products. "We need to be in the normal places that consumers want to watch movies," he said.

Lewis noted that any threat that expansion in online services poses to physical stores is overshadowed by the need for consumers to see Blockbuster as the premium brand for movie viewing.

"The challenge of being a multi-channel retailer is you no longer can think only about the impact on the other leg. You have to think about what the consumer wants," he said. "We are the only (company) in the works that can deliver (via) stores, digital downloads, kiosks ... across all these channels."

About 10,000 movies will be available when the service launches in the latter half of this year. Most rental films on Blockbuster.com today cost about $2 to $4, while purchased movies start at less than $10.

Blockbuster claimed that its roster of movies on TiVo will outshine that of online choices available at Netflix and Amazon. Indeed, while Amazon and Netflix have more videos available in total, most are older titles, whereas Blockbuster.com offers many more recent hits.

On TiVo, once a video is selected, it begins to download to the set-top box, and can be watched even as the movie is being delivered over the Internet.

The deal beefs up the rosters of audio and video content -- including YouTube videos and Rhapsody music -- that TiVo offers its fee-paying subscribers. The company hopes to differentiate from generic DVRs offered by cable, phone company and satellite TV companies -- sometimes at a steep discount to TiVo's service.

That's important since the company's subscriber growth has suffered, and, excluding the benefit of a legal windfall, it barely eked out a profit last year. Still, TiVo is bolstering its subscriber base with new Comcast customers, and hopes to win a patent case with EchoStar that may result in some kind of amiable partnership.

In addition, it is adding new content services that keep current TiVo users loyal, and possibly draw in others.

"One area that we have to do some more exploring is sports," said Tara Maitra, vice president of Content Services and Ad Sales at TiVo.

(Reporting by Franklin Paul, editing by Matthew Lewis)

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